Lone Star Steakhouse & Saloon Inc. agreed to be acquired by buyout firm Lone Star Funds for about $600 million.
Lone Star Steakhouse shareholders will receive $27.10 each in cash, 15 percent more than Thursday's closing price, the Wichita, Kan., company said Friday. The company owns 265 U.S. restaurants under names including Lone Star Steakhouse, Sullivan's Steakhouse and Del Frisco's Double Eagle Steak House. It earned $31 million on sales of $669 million last year.
Lone Star Funds has made at least four hotel and restaurant acquisitions in the United States, including Shoney's and Captain D's. Lone Star Steakhouse spokeswoman Karen Davis didn't return a call for comment.
The company sold for less than it's worth, said Peter Lupoff, a money manager at Robeco USA LLC in New York, which has more than $15 billion in assets. The firm owns the restaurant chain's shares.
"This company is worth $30 to $31 a share worst case," Lupoff said. "An orderly auction process is called for." The shares rose $3.55, or 15 percent, to $27.10 in Nasdaq Stock Market composite trading, their highest since May 19.
Lone Star Funds manages about $13 billion in assets and is run by its London-based founder, John Grayken. The firm is being investigated by South Korean prosecutors for its investments in the country. Grayken, 50, has said the probe is driven by an "anti-foreign political climate."
The value of leveraged buyouts of restaurant chains has soared this year to $3.9 billion from $419 million in the same period last year, according to data compiled by Bloomberg.